This reverts commit c07af02da527acb36db7caab3461600c94c9739e.
It was showing basic auth dialog in instances with public mode off when
user was not logged and accessed homepage. We need solve that somehow
differently.

Dynamic resolving in Nginx requires specifying DNS resolver, which in
turn requires a real DNS server on the host (to resolve from /etc/hosts
populated by Docker). This complicates the setup so we revert back to
static (on startup) resolving.

This is problematic for restarting of linked containers where IP of a
dependent container may change.

Next version of Docker (1.4) is supposed to have "fixed network
configuration" ability for containers which will solve the restart
issue.

upstreams make sense when you have server groups with more than 1 server
in each. Also, directly using hostnames in proxy_pass directives
(together with a variable, like $request_uri) makes Nginx resolve
hostnames dynamically, on each request instead of only on startup.

/etc/hosts is updated for all linked containers when a given container
is restarted. Refering by hostname has been in Docker for quite a while
so it doesn't require very new Docker version. However Docker 1.3
updates /etc/hosts of all linked containers with the new IP when given
container is restarted.